Small business loans are a powerful tool for owners. So why doesn’t every small business apply for one? The reason often has to do with nervousness, not problems qualifying. Put simply, many small business owners have heard myths about these loans. The fact is that SBA loans are one of the best types of financing you can get for your business. Here are other truths about small business loans.
SBA Loans Have Great Interest Rates
Are small business loans more expensive than other loans? Not usually. There’s no comparison when it comes to SBA financing versus short-term loans such as bridge loans. Your small business loan saves you a lot of money in these cases.
What about traditional term loans? The interest rates there are pretty close, and they may come down to how much money you’re comfortable using as a down payment. Also, small business loans usually have longer terms, which can make it easier to make monthly payments comfortably. In either case — SBA loan or conventional loan — you’re getting some of the lowest interest rates possible for financing.
Small Business Loans Don’t Have a Lot of Restrictions
There are some requirements for using a small business loan, such as needing to put it towards the purpose you originally applied for. As an example, if you applied for a small business loan for purchasing real estate, you can’t use the money to buy inventory instead.
That said, you can often customize your loan while applying. It’s completely possible to get a small business loan with money for real estate purchases, remodeling, expansion or equipment. If you want to get working capital for inventory and other needs, you simply add it to your loan.
Even Healthy Businesses Can Benefit From SBA Loans
Another misconception is that only businesses in trouble need SBA financing. In reality, healthy small businesses often benefit the most from getting a small business loan. They can use the money to drive growth and strengthen areas of the business that need it, before any problems appear. Taking advantage of smart opportunities is a great way to boost profits, cash flow and customer satisfaction.
The Qualification Process Isn’t as Complicated as You Think
One of the most common myths about SBA loans is that they’re a pain to apply for. This simply isn’t true, especially if you have financial professionals helping you. These days, getting prequalified for an SBA loan is fast. You don’t need endless business documents or perfect credit. The loan can be ready to go in a week or two.